From: Mark Boslet Staff Reporter Dow Jones
Cymers woes may be as simple as this:laser production equals demand.
Finally,this producer of market-leading lasers used in semiconducter production is able to make as many products as customers want. So instead of customers inflating orders to make sure they have as much as they need,these companies such as Nikon Corp and Cannon are ordering at more normal levels.
So say experts in the semiconductor equipement market who have been closely watching the rollout of a wave of new technology-technology capable of creating even more minute integrated circuts with a width of 0.25 microns.Cymers deep ultraviolet lasers are used in complex steppers that sketch this circutry on silicone waffers.
These problems have had an effect on the companies stock(CYMI) which has fallen sharpely recently.At the close Friday shares were down $4.50,or 15% to 25.50 on volume of more than 8.3million shares;average daily volume is 2.1 million.The shares traded above $39 last week.
A year abd a half ago,Cymer didnt have the capacity to meet demand,said G.Dan Hutchinson,president of VLSI Research Inc in San Jose,Calif. Customers responded by double ordering,he said.Since then the San Diego company has increased it's production and customers have responded by reeling in unnecessary orders,Hutchinson said.
I dont see anything odd here other than inventory fluctuation,Hutchinson said.
The company finally has "enough capacity to meet the demand"reports Robert Atkins,Cymer cheif executive.
In the past month since aknowledging that one unnamed customer postponed,or pushed out,orders for lasers,Cymer has been the subject of intense Wall Sreetscrutiny and speculation.Rumors flew that a company factory caught fire,that its lasers leaked gas,that rivals in Germany and Japan were getting the orders instead. All were false Atkins said
Genuine concern, however, has been focused on the difficult task of of readying steppers for production lines. Montgomery Securities analyst
Brett Hodess on Monday cut his rating on the stock to "hold" from "buy" after becoming concerned technical problems at Nikon and Canon could cause further pushbacks in laser orders.
It is a contention Cymer disputes. The company has "mothing to support the theory there are manufacturing problems," Akins said. Further, purchase forecasts from customers are not changing, he said.
But knowing for sure whether technical problems have cropped up is difficult. Stepper makers are careful not to let too much information escape as they debug their machines in pre-production tests. They fear the information could end up in the hands of competitors.
This is especially true as Nikon and Canon find themselves competing against higher quality machines from Dutch-based ASm Lithography Holding N.V. (ASMLF), also a Cymer customer, one industry executive said.
Canon and Nikon have debugging to do, but the rollout of the technology is going as expected, Hutcheson said. Industry sources say the most visible problem seems to be a complex interface Nikon has been working on to better coordinate the function of the laser and stepper.
At the same time, demand remains strong. And it is expected to get stronger. VLSI expects sales of deep ultraviolet steppers to climb from 459 million in 19996 to 1.366 billion this year and to 5.059 billion in19998.Projections for 2000 show the market at 8.04 billion.
Still Cymers third qurter is not without risk.The order pushout in early Sept caused the company to lose time refitting the products for other buyers,Atkins said.That has left it racing to close business by the end of Sept.
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